Defensive Sectors Outperforming but Defensive Asset Classes Lagging

• Scott Krisiloff
• March 20th, 2013

So far Healthcare ($XLV) and Consumer Staples ($XLP) are the best performing Sector SPDRs year to date, which seems a bit odd given that the $SPX is up nearly 10% and that these are two traditionally defensive sectors.  With a backdrop of an improving economy and heavy monetary stimulus, one might expect more cyclical and high beta sectors to be leading.

The outperformance of the defensive sectors is even more of a head scratcher considering that defensive asset classes like $GLD and $TLT are each down year to date.  The divergence might suggest that while investors are comfortable returning to equities, they are still only dipping toes into equity markets, not willing to embrace more cyclical business models.

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